‘Giving the W-4 the What For’

Your editorial (Feb. 11), “Giving the W-4 What For,” did not identify the reasons that prompted the Internal Revenue Service to design such a complicated form.

The bottom line is that about 40 million taxpayers who itemize deductions, have non-wage income sources and/or are married couples where both spouses work will owe more taxes under the new tax reforms. The W-4 form requires that these taxpayers “prepare” their 1987 tax returns to determine how many exemption credits they may claim.

While many of us are struggling now to do the 1986 tax year returns, the impossible task of projecting within 90% of tax liability what will happen in 1987 is stupid and an insult to everyone. The threat of a “penalty” in the event of mistakes and underestimating withholding taxes adds injury to the insult.

What the IRS is afraid of, and will not make public, is that many taxpayers will owe such a large amount of taxes that a “collection” problem will arise. Fortunately, for the withholding tax system, billions of tax dollars are collected almost painlessly. Very few taxpayers could meet the tax obligation at the end of the year if such taxes were not withheld.

IRS Commissioner Lawrence Gibbs deserves credit for offering a solution. Taxpayers should insure that enough tax is withheld to match their 1986 tax total. Many of them will still owe tax dollars but will not have to pay any penalty. Some taxpayers might do well to pay quarterly estimated taxes to accomplish the same result if they have non-wage income.

As for the $500 fee charged by a New York accounting firm for filling out a W-4 form . . . under the new tax rules none of the fee may be deductible unless it exceeds 2% of 1987’s adjusted gross income. Please don’t blame the accountants!

JOSEPH L. WEISS

Los Angeles